Most 1- and 5-quart engine oil bottles sit on retail shelves, waiting to be plucked by one of the dwindling numbers of do-it-yourself engine oil consumers. Oil sold to the DIY segment has dipped from 30 percent of aftermarket oil consumption in 2013 to between 20 and 25 percent today, according to Larry Solomon of Strategic Resources. (See Markets Change, but Customer Service Still Rules in the January 2020 issue of LubesnGreases.)
To compound the trend, the coming wave of electric vehicles will use far fewer lubricants-and no engine oil-and most of those lubes wont require service replacement. Will the rise of EVs spell the end of the quart-size engine oil bottle? What about other lubricant packaging?
From BMW to Nissan, automakers are shifting to battery-powered vehicles, spurred on by emissions regulations and consumer sentiment. While most EVs are small to mid-size cars, the market is expanding into pickup trucks. For example, American electric vehicle manufacturer Rivian will soon begin selling its 2021 R1T pickup.
In 2019, worldwide appetite for finished lubricants inched just above 40.5 million tons, according to Parsippany, New Jersey-based consultancy Kline & Co., with automotive products accounting for more than half. That breaks down to about 23 percent heavy-duty engine oil and 21 percent passenger car motor oil, with gear oil, transmission fluid and wheel bearing and chassis greases making up 9 percent.
According to Kline, PCMO demand is forecast to decline after 2030 as full-electric vehicles take market share from hybrids, which still need some engine oil. A McKinsey study predicts that automotive lube demand will decline 0.8 percent per year from 2025 to 2035, thanks to uptake of electric vehicles as well as car sharing and ride sharing services.
The rise of the EV will not make the lubricant industry obsolete but will affect sales, said Matthew Wade, CEO of the Electric Vehicle Institute in Baltimore, Maryland. There are still components that need to be greased and lubed, he noted.
EVs typically use 40 different lubricants, according to Wade. With engine speeds upwards of 15,000 revolutions per minute, EVs can experience massive fluctuations in power flow and require oil for the gear reducer and transmission and specially formulated fluids to improve cooling. For the battery and on-board electronics, thermal management fluids will be needed to assist in rapid charging and strong acceleration in order to increase range and ensure safety.
A number of oil majors and independents have launched lubricants and fluids designed specifically for EVs since 2018. The worlds largest supplier of finished lubricants, Royal Dutch Shell, developed a number of powertrain fluids geared toward EVs and hybrids. Frances Total introduced two brands of lubricants and fluids for EVs and hybrids, Malaysias Petronas released its own line of EV fluids and greases, and Multisol, Valvoline, Fuchs and ExxonMobil have all launched fluids dedicated to hybrids or full electric cars. Meanwhile, BP is overhauling its Castrol lubricants for EVs.
A Bloomberg News article noted that Castrol and Fuchs Lubricants have developed an international team of researchers and supervisors focusing exclusively on development and sales of EV lubricants and fluids. EV manufacturers are hurrying to extend battery ranges, said David Hall, automotive lubricants technology director with Castrol, and a lubricant with just 1 percent efficiency gain could increase driving range by four miles.
The Packaging Switch
Just as the uptake of EVs in the automotive industry has rattled the lubes market, the decline in lubricant demand will have a knock-on effect for other businesses, including the packaging industry.
According to Randy Austin, director of Scholle IPNs North America production line, the change from internal combustion engines to battery-powered vehicles was inevitable, and the packaging industry is starting to make the switch-but at a slow pace.
I dont think the industry was surprised …. We were reliant on the combustion engine base, but now were looking at packaging for EVs, he said.
Part of the shift within the packaging sector is a focus on technology. Austin said the industry can develop specialized containers with features such as a lock-out system, which only permits a specific fluid to be used in a certain vehicle. However, I dont think that will be next week, he predicted.
Austin noted that fluid packaging can come in nearly any size, from as little as 10 milliliters to larger flex containers holding tens of thousands of liters. DIY consumers of automotive lubes usually purchase fluids in containers with enough for a full engine oil change (about 5 quarts) or a top-off of other fluids.
George Morvey, industry manager with Kline & Co.s Energy Practice, said that hes not sure how much service fill volume there will be for EV fluids, but he suspects it will be mostly a factory-fill market with products shipped to assembly plants in either drums or intermediate bulk containers.
So, will the rise of EVs put the nail in the coffin of DIY consumer engine oil sales? I cant imagine a Tesla owner going to Walmart to buy a quart of battery coolant and changing the fluid in the street outside of his or her home, Morvey said.
Austin agreed, pointing out that the downside to EVs is the end of the shade-tree mechanic. The do-it-yourself market has been shrinking for years, and dealerships and repair shops have picked up the slack. These service centers purchase specialized lubricants on a large scale in drums or flexibags.
There is an environmental benefit to the decline of sales in quart-size oil bottles, Austin said. Currently, nearly all lubricant packages end up in a landfill. But with more vehicle owners headed to the dealership or repair shops for fluid changes, an eco-friendly cycle can begin. What happens when the package is used? Customers dont clean or recycle the package, but repair shops … recycle, which reduces waste, he explained. Also, many bulk containers, such as IBCs, can be returned to the manufacturer and reused.
Heavy-duty Motor Oil
The commercial vehicle market is getting a slower start with electrification, but it wont be left in the dust. Indianapolis-based Allison Transmission has introduced an axle system for full battery electric, fuel cell electric and hybrid heavy-duty trucks and buses. In January, Peterbilt unveiled a medium-duty all-electric work truck, adding to its lineup that includes a Class 8 electric truck and an electric garbage truck. Volvo has also entered the medium-duty battery-powered market in Europe. For heavy-duty factory fill engine oil alone, Power Systems Research predicts volumes will drop 12.5 percent below what they would have been by 2030 if electric trucks werent on the scene.
While heavy-duty motor oil usage is expected to dip over the next two decades, only a small part of that decline is due to electrification of heavy-duty vehicles, according to a Kline study of 15 key country markets. On-highway HDMO demand will decrease at a compound annual rate of 1.6 percent, from about 2.5 million metric tons in 2018 to 2 million by 2040, said Klines Sharbel Luzuriaga, while speaking at the Goma Lubricants and Base Oils Symposium in Zagreb.
Most of the decline will stem from factors such as increasing oil drain intervals. However, HDMO demand would only fall at 1.3 percent per year if not for electrification of heavy-duty fleets. Kline projects that within 20 years EV penetration in on-highway commercial vehicles will reach above 25 percent in Canada and Germany, just under 20 percent in China and 15 percent in the United States.
Japan has the highest penetration of commercial electric vehicles today, at approximately 5 percent.
Its not clear that the changeover to electric trucks in the commercial sector will have much impact on lubes packaging, as commercial fleet maintenance shops would typically purchase lubricants in bulk.
While the EV revolution will have casualties, including traditional lubricants and their packaging, the Electric Vehicle Institutes Wade said it will also have victors. When it comes down to it, the technology in EVs is evolving so quickly in the industry, the winners will be companies that evolve with the industry. And that includes packaging.
Boris Kamchev contributed to this article.